Cohesion policy has had a proven effect in helping the European Union's regions to develop, but it will face some new challenges in years ahead. Those are the findings in the European Commission's latest report on economic and social cohesion . The fourth such report, published last week, provides the economic, social and territorial situation of the enlarged Union of 27 Member States and 268 regions for the first time. The report contains detailed analysis of the position of regions in terms of GDP, productivity and employment. It identifies a series of challenges with which Member States and regions will be confronted in the years ahead.
Presenting the report, Danuta Hübner, Commissioner responsible for regional policy, said: “Cohesion policy has demonstrated its capacity to adjust to changing circumstances. It has supported much-needed investment in infrastructure, human resources, and the modernisation and diversification of regional economies. It has helped to shift the policy mix of public investment in Member States towards the priorities of the Union. Cohesion policy is all about providing opportunities to each EU citizen wherever they live by reducing disparities between regions, by mobilising unused potential, by concentrating resources on growth-generating investments. The Union faces many challenges in the period ahead: a population which will start to decline by around 2020 and is already declining in many regions, increased economic pressure from global competitors, increased energy prices, climate change, and social polarisation. Europe must respond to these challenges. To do this we need to involve all the regions and people in generating wealth, jobs and growth”.
Vladimír Špidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities, said: "This policy has helped to reducing social exclusion and poverty and to improving administration and public governance, particularly at sub-national level. In so doing, the policy has contributed to the growth of GDP and the reductions of disparities in the Union. The European Social Fund (ESF) will be investing more than 10 billion Euros in people each year for the next seven years, helping them to improve their skills and employability. The challenges of technological progress and globalisation make it particularly important to ensure that people have the skills to cope with change – workers must be able to adapt." He added, "The ESF is an essential tool in helping Member States put flexicurity – a combination of active labour market policies, flexible contractual arrangements and lifelong learning – into practice. It also plays a major role in helping to promote and implement reconciliation policies which are especially important for the EU's efforts to raise the number of women and men in work".
The report has four parts:
1. Economic, social and territorial situation and trends in Member States and regions of the EU-27: The analysis shows that disparities in income and employment across the European Union have narrowed over the past decade. But, there are still important deficits to make up between the least well-off and the rest which will require a long-term effort.
2. The impact of cohesion policy: European cohesion programmes have helped directly to promote regional convergence and employment. For example, between 2000 and 2006, the policy has contributed to increasing GDP by 2.8% in Greece and 2.0% in Portugal; preliminary estimates suggest that over the period 2007-2013, the policy will contribute to increase the GDP of Lithuania, Latvia, and Czech Republic by around 8.5%, of Poland by around 5.5%, and of Greece by around 3.5%. Cohesion policy has also contributed to reducing social exclusion and poverty: it co-finances the training of 9 million people annually, more of half of them women, leading to better employment conditions and higher income; over 450 000 gross jobs were generated in six countries between 2000 and 2005, accounting for 2/3 of Objective 2 funding.
3. National policies and cohesion: Public investment over the past years has been on a declining path as budgets are confronted with the consequences of an ageing population (reform of pensions, more costly education and health systems) and economic reform leading to consolidation of public finances. In 1993, public investment amounted to around 2.9% of GDP. Twelve years later, it had declined to 2.4% of GDP. At the same time, we witness a process whereby the decision and management on public investment is slowly, but steadily being decentralised to regional and local levels. Between 2000 and 2005 public expenditure at those levels has been increasing annually by 3.6%, faster than GDP (1.7%) and total public expenditure (2.4%).
4. Community policies and cohesion: The different Community policies – R&D and innovation, agriculture, competition and state aid - have the potential to increase the effectiveness of cohesion policy, for example, by taking explicit account of economic, social and territorial circumstances. The report shows that this is increasingly the case, but that there are still synergies to exploit.
